As the European Central Bank (ECB) is preparing for its second monetary policy meeting for 2015 in Cyprus, the euro hit a fresh low against the U.S. dollar. The single European currency traded below $1.11 for the first time since September 2003 as currency traders discounted a strong U.S. jobs report and await details regarding the European Central Bank’s quantitative easing program.
As the EUR/USD breaks out of recent ranges it only signifies good news for trading volumes at major brokerages and ECNs.
Despite prevailing uncertainty about the U.S. non-farm payroll number, the Institute of Supply Management indices for the manufacturing and the non-manufacturing sectors of the U.S. economy have shown growth in their employment component, with the service sector particularly strong.
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The main risk event drawing closer however is the ECB meeting to be held in Cyprus. The central bank has announced a bond buying program for the Euro Area, buying €60 billion per month starting from the 1st of March, 2015, totaling €720 billion per annum.
The ECB is expected to unveil further details as to how it plans to conduct asset purchases through the national central banks. The majority of the bond buying program is likely to focus on government securities.
Swiss bank Credit Suisse has issued a recommendation to short the EUR/USD for a move towards 1.0836, while the March Reuters poll for currency analysts revealed an increasingly pessimistic outlook for the single european currency. The average forecast by analysts was for 1.12 within a month and 1.08 in six and twelve months.
Analysts from Bank of America Merrill Lynch shared in a recent note that the EUR/USD is likely to target and break below the September 2013 low set at 1.0765.